Paraguay's presidential coup: the inside story

Fernando Lugo, the radical priest elected Paraguay's president in 2008 after decades of authoritarian rule, has been deposed less than a year before the end of his term. This dramatic turn of events is rooted in the strains produced by economic transformation and the limits of the country's democratisation, says Andrew Nickson. 


Andrew Nickson
10 July 2012

Paraguay's capital city of Asunción was on 21-22 June 2012 witness to rare constitutional and political drama. First, the 80-member lower house of Paraguay's congress initiated a move to impeach President Fernando Lugo, and voted by a 76-1 majority to support it; then the next day, in a lightning session lasting less than two hours, the 45-member upper house (senate) concluded the process by a vote of 39-4.

Fernando Lugo, a former Catholic bishop, had been elected Paraguay's president in April 2008 on a platform of social change. The vote ended sixty-one years of uninterrupted rule by the Colorado Party, much of it under the dictatorship of Alfredo Stroessner (1954-89). Moreover, it was the first time since 1887 - when Paraguay's two traditional parties, the Colorados and the Liberals, were created - that a political party had relinquished power to another through the ballot-box rather than through a military coup (see "Paraguay: Fernando Lugo vs the Colorado machine", 28 February 2008).

Lugo's victory was aided both by his alliance with the Liberal Party and a split inside the Colorados. But the parallel legislative elections in 2008 left both houses of congress dominated by the traditional parties, with minimal representation for Lugo's own left-wing supporters (six out of eighty seats in the lower house, and three of forty-five seats in the senate) (see "Paraguay's historic election", 22 April 2008)

Lugo's overthrow, and the appointment as his successor of the vice-president (and Liberal) Federico Franco, have now altered the political landscape in advance of the scheduled presidential and legislative elections in April 2013. The extraordinary events of 21-22 June, however, involve more than manoeuvring for power in Asunción. In broad terms, they can be seen as the political expression of economic changes that have been occurring in Paraguay since 2008. Most important is theat way that entrenched corruption and growing inequality in access to land, reinforced by the rapid expansion of commercial agriculture (especially soybean production organised by Brazilian immigrants), have created contradictions that are having a profound impact on the social and political order.

This article outlines and seeks to explain the main dynamics at work in this epic Paraguayan - and Latin American - story.

The process

During his four years in power, Lugo had gradually disillusioned voters, on two counts: his failure to address the country's pressing problems of land reform and tax reform, and his personal behaviour (he has now admitted to fathering two children before his election while he was serving as a "bishop of the poor", and there are two further paternity-suits in the pipeline). Rhetoric aside, it is hard to see Lugo as part of the "pink tide" of leftist governments in Latin America.

The impeachment proceeding against Lugo was based on five counts of "bad performance" (none of which, however, involved accusations of corruption). The most prominent was his alleged complicity in Paraguay's worst incident of political violence for decades, on 15 June 2012, when six police and eleven civilians were killed in a shoot-out during a police operation to clear landless protesters in the northern department of Canindeyú. The tragedy occurred on a 2,000-hectare property at Campo Morombí, which had been spuriously obtained during the Stroessner era by a businessman and former senator, Blas Riquelme, under the guise of "land reform".

In fact, no evidence at all of Lugo's involvement in the incident was presented at the impeachment trial (for which he was given less than twenty-four hours to prepare, and only two hours to present a defence).

There was hostile reaction in the region to the president's instant impeachment, and his replacement by the former vice-president, Federico Franco, with Paraguay risking diplomatic isolation. The criticism ranged across the ideological spectrum: Chile and Colombia; Venezuela and Bolivia; Argentina, Brazil and Uruguay - all recalled their ambassadors and (in the case of the last group) suspended Paraguay from membership in the Mercosur economic block until the April 2013 elections. Paraguay was also been suspended from Unasur, the South American regional political bloc.

Cristina Kirchner, Argentina's president, accused the Paraguayan congress of a "parliamentary coup". Dilma Rousseff, Brazil's president, was also unwavering in her support for Lugo, despite being pressed to recognise the new government by the powerful brasiguayo lobby (the 350,000-strong Brazilian farming community inside Paraguay that has strong links with Brazil's rural landowning class).

In response to the strong international condemnation, the Franco administration has tapped into the national psyche by accusing Mercosur partners of resurrecting the "triple alliance" (Argentina, Brazil and Uruguay) that decimated the country in the war of 1865-70 and by making allegations of an international communist conspiracy against Paraguay led by the Venezuelan president, Hugo Chávez (thus mirroring the cold-war propaganda of the Stroessner dictatorship). Franco accused the Venezuelan government of putting pressure on the armed forces to oppose the impeachment of Lugo and his defence minister, Maria Liz Garcia, accused Venezuelan foreign minister Nicolas Maduro of meeting with senior Paraguayan military officials before the Paraguayan congress met to vote for Lugo's removal.

Canada and Germany, by contrast, were quick to appease the new government. The Canadian-based multinational mining giant Rio Tinto Alcan (RTA) is in advanced negotiations with the Paraguayan government to construct a 674,000-tonne Greenfield aluminium-smelter at a cost of $3.5 billion that would use cheap bulk energy from the massive Itaipú hydroplant (which is under joint Paraguay-Brazil ownership).

The United States for its part is vacillating in its response to Lugo's overthrow. Washington expressed reservations about the haste of the impeachment process, and said it would await the outcome of an investigative mission from the Organisation of American States (OAS) arrived in Paraguay on 1 July 2012; it is scheduled to report its findings on 10 July.

The congress

Why, then, did the Paraguayan congress impeach Lugo so quickly - and only ten months before he would be leaving office in any case? The answer to this question raises difficult issues about the nature and limits of democratisation in Latin America.

An early clue lies in the identity of Paraguay's congressmen and congresswomen. The most obvious thing to note is that they are almost all large rural landowners, with titles held either directly or in the names of friends and family. In 2008, a former head of the World Bank in Paraguay expressed his shock at discovering that virtually every member of congress that he met fitted this description. Many were also beneficiaries of the illegal transfer of large tracts of state lands (typically 2,000 hectares and above) to military and civilian supporters of the Alfredo Stroessner dictatorship, a process that continued through the subsequent two decades of Colorado governments.

Through this "land reform" scam, Paraguay's rich and powerful - assisted by venal lawyers and officials of the "land reform agency" - masquerade as landless peasants, enabling them to buy virgin forest at a rock-bottom "fiscal" price that is now typically between 1%-5% of its true commercial value. None of these illegal beneficiaries were eligible under the country's land-reform legislation, which was designed to benefit landless families. They received plots (so-called tierras malhabidas [ill-gotten lands]) far in excess of the legal limits, and were sometimes even granted more than one plot of land in different parts of the country. The report of Paraguay's truth-and-justice commission (2008) that investigated human-rights abuses during the Stroessner period found that from 1954-2003, some 3,336 beneficiaries were in this way illegally awarded 4,232 tierras malhabidas totalling 7.8 million hectares (see Isabel Hilton, "Alfredo Stroessner: revisiting the general", 17 August 2006).

Fernando Lugo's government did nothing to recuperate this land, and did not even set up a cadastre (rural land-registry) to find out who actually owned what. He proved incapable of halting the illegal transfer, which continued throughout his presidency. In September 2011, Alberto Antebi Duarte - the son of Paraguay's second richest landowner, Roberto Antebi - was awarded 4,000 hectares by this means thanks to high-level corruption in Indert, the state body charged with "land reform".

This continued a longstanding trend. In 2000, two members of the family of Federico Franco's newly appointed foreign minister, José Félix Fernández Estigarribia (then based in Barcelona) were awarded land at Fuerte Olimpo in the Paraguayan Chaco: his daughter Marta Elvira Fernández Lloret received 3,208 hectares, and his wife María Teresa Lloret de Fernández received 3,000 hectares. Needless to say, neither of these scions of the establishment are "landless peasants".

With such a pedigree, it is unsurprising that congress has functioned as the political embodiment of the tiny elite that controls Paraguay's destiny. This is a country where 21% of the population control 87% of the land, the most unequal concentration of land ownership in Latin America; a pattern, moreover, which has worsened substantially since the overthrow of Stroessner in 1989, as commercial soybean-farming and cattle-ranching have taken off.

Paraguay is now the world's fourth-largest exporter of soybean and the eighth-largest exporter of meat. A rooted hostility toward tax reform is a crucial mechanism for maintaining this extreme inequality. The congress has repeatedly opposed a tax on unprocessed cereal exports (soybean, maize and rapeseed) and has kept the tax on commercial agriculture to derisory levels (the amount netted in 2011 was only $13m, equivalent to 0.5% of total tax revenue).

But even more significant, the congress has postponed the introduction of personal income tax on four occasions since 2006 - including in 2010 when the country recorded the second-highest growth rate in the world (15.3%), after Singapore. This despite the fact that the proposed income-tax law would allow taxpayers (limited to the roughly top 5% of the population) to deduct any personal expenditure - yes, any - as deductible allowances from tax liability.

This is the same congress that reluctantly complied with a constitutional requirement obliging its members to declare their assets on taking and leaving office - then refused to publish the said information, and has repeatedly refused to initiate impeachment proceedings against supreme-court judges accused of blatant corruption and nepotism.

This is the same congress that since 2008 has imposed severe cuts in budget votes on mother-and-child health programmes and an incipient anti-poverty conditional cash-transfer programme for Paraguay's "poorest-of-the poor", even as it cynically lambasted Lugo for failing to reduce poverty levels (which, according to the household survey of 2011, stand at 32.4% of the population, with 18% in extreme poverty).

The Paraguayan congress's record in these areas means that it is held in contempt by a majority of citizens. So low is its reputation that in polling surveys it invariably is regarded as the least trusted institution of the state. Even when, in 2008, the United Nations Development Programme (UNDP) entrusted the congress to oversee its latest survey of "governance", it came out bottom yet again. (The congress bosses then stifled the planned follow-up, such as distribution of the survey, by refusing to convene a monitoring committee).

The protest

An institution with such a composition and record can hardly be said to be reflecting the broader interests of society. A closer look at the events just prior to Fernando Lugo's removal illustrates how these background elements were at play.

In April 2012, the congress suddenly added an extra $35 million to the 2012 budget to pay for 5,000 staff for the bloated electoral commission. This was ostensibly in order to cope with the expected demand for Paraguayans living overseas to register to vote following a recent referendum that agreed to grant them this right. But the real reason was to fund punteros, the party-political operators who are crucial to bring in the vote in the April 2013 elections. All parties - Colorados, Liberals, Unace (a breakaway from the Colorados), and the pro-business party, Patria Querida - had agreed on the "division of the cake" and sought to overturn Lugo's decision to veto the move.

Then, something happened that was unheard of in Paraguay. A group of young professionals launched a social-media protest campaign via Twitter that mobilised thousands outside congress in support of the presidential veto. After Office Revolucionario (AOR) argued that any increase in the budget should instead be spent on expanding primary healthcare in a country which still has the highest maternal mortality rate in Latin America.

In the face of the protest, the congress was forced in late May to back down, abandoning its attempt to overturn the presidential veto. This success emboldened AOR to announce its next campaign: ending the "closed party-list" electoral system, whereby the rich and powerful literally buy their place in the senate or congress through contributions to party finances. By opening up the electoral system, AOR sought to broaden the social representation in Paraguay's legislature. At present, due in large part to the closed party-list system, not one of the 80 deputies or 45 senators comes from what could broadly be described as a "poor peasant-farmer" background, even though the latter constitute over 60% of the population.

It is clear that members of congress felt under threat from civil society, just at a time - the electoral-campaign period - when access to state funds would became crucial in ensuring their re-election as either senators or deputies. But what tipped the balance was the confrontation between landless peasants and the police on 15 June at Campo Morombí.

The crisis

There has been constant peaceful peasant protest in favour of land reform and the confiscation of the tierras malhabidas in Paraguaty ever since Alfredo Stroessner was overthrown in 1989. Every year, usually in June, thousands of peasants march through Asunción, are applauded by the public, receive empty promises of land reform from politicians, return home, and are forgotten. In addition, since the mid-1990s, the two main peasant organisations - the MCNOC and the FNC - have had over 100 of their activists killed by police and thugs paid by landowners.

When Fernando Lugo came to power in 2008, the peasants thought that - at last - positive action would be taken. As that hope dimmed under his lacklustre administration, and a more radical grouping - the Liga Nacional de Carperos (LNT, with carperos meaning roughly "tent-dwellers") - began to eclipse the MCNOC and FNC. When peasant activists engaged in a violent shoot-out for the first time, with six police and eleven peasants were killed at Campo Morombí - the message was clear: no longer could the elite buy off peasant leaders with false promises of reform. A new strategy had to be employed to "defend private property".

In this context, the evidence-free accusation by the architects of the impeachment process - that Lugo was complicit in the shoot-out (and even that he had links to an incipient rural guerrilla movement, the Ejército del Pueblo Paraguayo [EPP]) - can be understood as a clear message to Paraguay's rural poor: we are here to stay and we will make no concessions. In other words, the exclusionary and corrupt land-ownership model will continue to be imposed. In a most revealing remark to the international press corps, Federico Franco said that his political priority was to "avoid a civil war".

The impeachment proposal was made by the opposition Colorado Party and gained support from the Liberals, who were hitherto in a tacit alliance with Lugo (provoking five Liberal ministers to resign from the government). The deal was brokered by Horacio Cartes, a millionaire businessman involved in the production and "trading" of cigarettes to Brazil, who met with Liberal leaders during the weekend following the Campo Morombí killings. Cartes joined the Colorado party only in September 2010, but is already its leading presidential contender; his popularity, though, has slumped following press revelations of his alleged involvement in narcotics trade and money-laundering. When on 5 July Uruguayan president José Mujica suggested that what he called "narcoloradismo" was a factor in the impeachment of Lugo, he may also having been revealing a hitherto unstated concern that prompted such a united regional response.

More broadly, the analysts Gustavo Setrini and Lucas Arce note that by joining forces to remove Lugo, the Colorados and Liberals have sought to suffocate efforts by the left to establish "… its first foothold within the Paraguayan state and its first opportunity to build its own political machine - a deeply threatening prospect for both traditional parties" (see "Paraguay's impeached democracy", Project Syndicate, 9 July 2012).

The new Franco government has promised to address Paraguay's deep problem of inequality in land tenure, although little can be expected from an interim president and in the absence of a rural cadastre. Franco's chances of using his time to strengthen the Liberal vote around a consensus presidential candidate are limited. He will have to oversee a scramble for lucrative ministerial posts within his faction-ridden party, which is likely to create further dissension.

The Liberals' "home delivery" poll on 1 April 2012 to choose their presidential candidate in 2013 ended with the party's electoral commission declaring party president Blas Llano as the winner. The result was immediately disputed by Senator Efrain Alegre, who is threatening to stand as an independent (Franco himself came a poor third). There are now fears that Franco will use his new powers to resurrect his bid for the nomination, supported by a powerful Franco clan based in the Fernando de la Mora suburb of Asunción.

He has already broken his earnest promise to eradicate nepotism and clientelism - the foundation of patronage politics in Paraguay - when on 2 July he appointed his sister-in-law, Mirtha Vergara, to the lucrative and powerful post of director of the binational Itaipú hydropower company, whose funds have long been diverted to finance political campaigns.

The aftermath

The deposition of the incumbent president was unpopular among Paraguayans, even among those who did not support Lugo. It will further intensify citizens' disdain for members of congress, and will heighten political instability in the run-up to the April 2013 elections. The prospects of effective governance may well deteriorate further as the resurgent Colorado party reacts strongly against likely efforts by the Franco administration to use state funds now at its disposal to boost the electoral prospects of the divided Liberals. The new government will also face a heavy task in repairing damaged relations with governments throughout Latin America, and across the ideological spectrum.

Asunción has seen only muted street demonstrations in support of Lugo, but there have been large protests in many rural areas where small farmers are well organised (though these are mostly unreported in the national press). More worryingly, an EPP platoon - departing from the organisation's previous focus on kidnapping landowners for ransom - targeted a Brazilian company engaged in illegal logging on 28 June at Azote'y, in the department of Concepción. The assailants burned transport equipment, and then for the first time separated a Brazilian labourer from his Paraguayan colleagues and killed him. This heightens the fear that in current conditions the widespread xenophobia towards brasiguayos in rural areas may increase.

Lugo himself at first accepted the congress's decision, but has since called on citizens to oppose the new government, saying: "The democratic process in this country is broken." Indeed, the wide perception that his sudden ousting was undemocratic will (his lacklustre record in office notwithstanding) help restore his tarnished political image and may enable him to stand for a senate seat in 2013 as head of the left-wing Frente Guasu alliance. Perhaps in the interim he will learn some lessons about political strategy and personal morality. After his fall, the task of reforming Paraguay's political and economic order is more essential than ever.

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